@CBCAllInADay interviews law Professor Michael Kirsch about his reasons for supporting taxation of #Americansabroad http://t.co/FcVL4QJIXa
— U.S. Citizen Abroad (@USCitizenAbroad) August 16, 2014
Notre Dame law professor Michael Kirsch defended citizenship-based taxation at the May 2, 2014 ACA Conference on citizenship-based taxation.
Here is a very recent interview with him. Listen carefully to his rationale.
George: Two wrongs don’t make a right. The world is not going to be a better place if all nations besides the US and Eritrea start lining up to tax their own expats the same way as the US and Eritrea currently taxe theirs. The only solution to the problem is for the only two nations on earth who practice CBT to come into the company of the rest of the world and begin taxing on the basis of residency … *real* residency, not some cockamamie “residency for tax purposes”. If our Human Rights Complaint is accepted into the United Nations’ complaint process perhaps this day will come sooner than we think.
An absurdity related to CBT is that male Canadians 18-26 who are tainted by US citizenship have to register for the selective service (draft) in the USA, even though they may not ever lived there. I thought my 20 year old son, who is in this situation, was exempt and I posted that observation on IBS but somebody, maybe bubblebustin, corrected that. Why fight wars for a foreign power? Similar to paying taxes to a foreign country.
@Kermitzi
Would our Cdn government hand over your son for draft evasion if the US went to war? Scary.
@kermitzi, IF the Government of Canada considers it correct and proper for Canadian Citizens with clinging US nationality to be subject to FATCA then US Selective Service registration for young male Canadian Citizens with clinging US nationality is equally correct and the Government of Canada should make the process “easier” for those young men to comply. I am surprised the PM has not suggested same.
@Muzzled “The world is not going to be a better place if all nations besides the US and Eritrea start lining up to tax their own expats the same way as the US and Eritrea currently taxe theirs.”
I support retaliatory CBT (RCBT). It would only apply to those countries that have CBT.
CBT is sucking the blood out of places like Greece that have far more Greek Nationals in the USA than the other way around.
Sadly, I only think CBT can be repealed is IF the USA realizes its costing them far more money in the end.
Besides compared to the EU, the United States IS a secrecy laden tax haven that needs to be placed in direct sunshine. States like Delaware, Nevada and Wyoming are marketing their secretive tax schemes in the European Union and it needs to stop.
Google “Delaware corporation privacy”
Prof Kirsch, why is your government allowing businesses like this to solicit business from residents of the European Union?
Delaware makes the Swiss look like pikers!!
Lets see…..
1.) No taxes in Deleware
2.) Nominee Officers.
3.) Nominee shareholders (can you believe that one)
4.) No restriction on non-residents.
AND……..the websites are not restricted to the US. They could at least restrict their sales to residents of the USA only!!
Goose……gander…..pot…………
It is fraught with hypocrisy.
The real problem is that people like Kirsch make it sound legitimate. What would homelanders say to the following headline: *Fellow americans overseas are having their lifetimes savings and retirement funds confiscated” (by the government with no benefits or services in return). Or “American expats are forced to pay large tributes to America without having access to any benefits.” Or even better “Many would-be Americans who are actually foreigners are forced to pay tribute to a country they have no allegiance to.” Because it is so tiresome to keep hearing about paying a “fair share” when there is nothing fair about it.
Words are powerful. They come with connotations. I think the word “taxes” has a lot of connotations that allow for people to follow that up with “fair share”.
I`m sorry English isn’t really my first language anymore. I don’t know if I am getting across what I mean very well. But although it is called “taxes”- RBT shows us that taxes are paid for services from a government. So in some way, taxes imposed upon non-residents aren’t really “taxes” anymore. They are demands for money for which one gets no benefits from the government. (And as we know- they actually should be tied into having a say in a government as well!) So what other word could one use to define what this really is in the media?
@ Polly
I can only think of a two word answer … extraterritorial extortion.
@George,
Interesting point to raise re the US draft.
I was just about to ask if Conservative MPs will come out with a matching statement that since they so deeply ‘respect’ US ‘right’ to make its own ‘sovereign’ tax laws, such that they seek to override our Charter, our Constitution, and ALL Canadian laws that conflict with FATCA, and use Canadian taxpayer resources to pay for the identification and reporting of Canadian account and personal data after classifying Canadian accountholders as US persons to turn over to the IRS; in order to be consistent they would have to assert a similarly based ‘respect’ for the ‘sovereign right’ of the US to make its own laws, and thereby to claim the right to the lives of young Canadian males via the US draft http://en.wikipedia.org/wiki/Selective_Service_System. Would they turn over that information to the US too?
Kirsch chose to deliberately cite tax AND draft obligations in his defense of the US extraterritorial tax system and description of what members of the “US community” must do. He asserted that those with US citizenship have a ‘voluntary continuing relationship “. He knew he was speaking via the CBC to a wide CANADIAN audience – some of whom will be young Canadian males or their families.
I hope that the Canadians who heard the interview realize that the US is serious about imposing its laws extraterritorially, and if it does so with taxes and financial reporting, what stops it from pursuing the draft registration? It requires that those with US citizenship travel only on a US passport regardless of other citizenship or home country. Would it condition the issuance of US passports on complying with the draft? The new comprehensive recording of both Canadian and US citizens crossing the border may provide them with opportunities to track those Canadian males who haven’t registered, if the US wanted to do such a thing. Israel was serious about claiming a Canadian citizen (and a Swede) who entered Israel, for the draft, so why not the US?
I am not posing this entirely in earnest, but, as a matter of the larger question of national sovereignty, extraterritorial claims by foreign governments, and the creation of second class Canadian citizenships that discriminate on the basis of national origin – if Harper and his merry minion MPs can make second class citizens of Canadians with a US birthplace or parents for US tax and banking purposes, then how would he rationalize the US potential for exposing young male Canadian citizens to the US draft? Our bank data includes birthdate, though only some will have their US birthplace on record – if someone uses a passport for ID.
I strongly doubt that Prof Kirsch monitors the IBS blog although it would be great if he did. Anyone who wants to send him an email with a link to this series of emails, he might actually look at them and learn something.
Ultimately, I think the anti-emigrant Berlin Wall concept is what motivates his fuzzy thinking. He has a bee in his bonnet that billionaires are going to leave the US and take all their money with them and the US won’t be able to get their “fair share” of someone else’s money even after, by definition, they will have taken their “fair share” all along! He made that argument – primarily his worry about missing out on estate tax – in Toronto even if he didn’t repeat it on CBC. Another straw man to knock down:
– the US and the UN Universal declaration both recognize the right to emigrate and the US fought (and lost) the War of 1812 about the issue. As such, trying to build a wall to discourage emigrants from leaving is pretty hard to justify on any principle that he would recognize simply from a desire to fleece the estate when they die. That is of course why he doesn’t pull the “protecting the tax base from emigration” argument that often – it is ugly and unpalatable.
– in his zeal to discourage emigrants from emigrating Prof Kirsch would catch an awful lot of people that have never belonged in the US system and never ever been part of it: children born abroad, mentally disabled who can’t renounce, adults who emigrated as children and never were a meaningful part of the “community” etc. Citizenship is a binary state: you are or you are not. Only a fraction – and a small fraction at that – of citizens living abroad fit Prof. Kirsch’s “fat cat emigrating to save taxes” bogeyman profile yet ALL are caught up in his horribly designed net.
– it is a factually silly argument. Few people move for tax reasons – VERY few. Virtually every other OECD country has higher individual rates of taxation and somehow they have not yet been depopulated despite the absence of emigration walls of the sort Prof. Kirsch secretly favours.
– a properly designed RBT system will capture capital gains etc. on property at the point of emigration. That is a fair and reasonable outcome and sufficiently compensates for loss of future estate tax. Accruals/income earned while living outside the US is simply not part of their entitlement (not part of their tax base). The US estate tax system is dumb, highly selective and out of whack with the rest of the world anyway. How about a proper capital gains tax and give it a rest? The estate tax is applied only to a relative handful of people anyway (the rich and super-rich) and the target audience are armed with the best tax advisers money can buy who devote all their waking hours to finding ways to defeat it. Little tax is actually collected from it. At any rate, applying an estate tax on 1% of the poplulation hardly justifies the persecution of 99% just in case they one day join the 1%!
If the principle of CBT is valid and proper, then it should be one the US would support and co-operate in enforcing worldwide were it to be embraced by all as the saving principle that Prof. Kirsch would have us believe it is. Of course the rest of the world has not done embraced CBT – and those, like Japan and the Phillipines who once had the US CBT system imposed upon them by military occupation authorities have since dropped it. The reason is simple: it breaks down if applied universally. Indeed, few countries would lose more to a system of universal CBT than a country of immigrants like the US as its immigrant population would be quickly strip-mined as a fiscal trojan horse for revenues by all of the countries who sent those huddled masses to seek their fortune in the first place. CBT is by its nature extraterritorial and any nation that sees its tax base under material threat from extraterritorial tax would react by witholding all co-operation if not actively laying down obstacles. Canada has afforded limited acquiescence to this absurd US policy primarily because we know that it will be enforced in such a way as to be practically meaningless. For now at least, FATCA will demand production of non-existent data from banks about birth place of Canadian resident clients etc. However, rightly or wrongly, Canada has seen little threat because it does not intend to allow the US to collect anything material. That is cold comfort to those being terrorized with FBAR demand letters and professional fees from compliance firms, etc. I think Ottawa has also misjudged the potential impact of FATCA over time as well as the impact on instinctively law-abiding people who are being terrified and persecuted by this unjust US extraterritorial invasion.
I would rhetorically further ask Prof Kirsch: if CBT is to be seriously applied (and you can’t deny it NEVER has been until now: 31,000 returns filed from Canada with 1 million alleged citizens speaks for itself; similar numbers from other countries), then how are you going to give affected taxpayers EFFECTIVE taxpayer rights? If a taxpayer in Buffalo wants to challenge an action of the IRS, he or she can go to court in Buffalo to seek redress. At most, a US citizen in the homeland might have to drive a couple of hours to the nearest Federal court office to file papers. What is an alleged citizen in Sudbury to do? What do you do about people who don’t accept your attribution of citizenship? What if that same person in Sudbury says they are NOT American – in your world, they must drive to Toronto, make an appointment and try to convince a consular officer. If they don’t like the answer they get to file suit in ….Washington? The proposition is not serious. The Emperor Caligula famously posted new laws on top of a tall flagpole that nobody could read before “legally” arresting people and having them put to death for violating them. You can’t extend US jurisdiction to the ends of the earth for purposes of CBT without extending access to justice to the same ends of the earth. That may not mean a court house on every corner (I expect an Alaskan in the bush is some ways from Juneau…), but it does mean practical, reasonable access. There is nothing like it – and by design. They are not “equal” citizens living abroad. They are sheep who are to be inspected to see if they happen to be carrying any wool worth the trouble of shearing. Not a very principled approach sir.
This debate is a dialogue of the deaf. Nobody on the other side of it cares, will ever listen or give it a moment’s thought. It is because it is and because we can and we don’t like you anyway and we’re the strongest and so there.
At its base, the US can’t make up its mind. The US Supreme Court told them they can’t strip citizenship because of the 14th amendment. They hate the idea of anyone being a dual citizen with divided loyalties and so, through this back door, they are turning the screws to ensure that anyone foolish enough to take the US Supreme Court up on those 14th Amendment rights will be punished for having done so. Personally, I don’t care if they want to discourage dual citizenship. I never wanted it and don’t have it. I have no intention of submitting myself to the US jurisdiction to PROVE I don’t have it (I gave it up decades ago without any doubt whatsoever), but will have all the paperwork needed to prove to a Canadian court should I ever have to. I resent only that they are seeking to put hurdles in front of people who they have been surprised with that little gift of permissive citizenship. As I mentioned earlier – you don’t impose unexpected obligations on people by surprise without having a burden to ensure they understood and accepted them (the example I gave was a spousal guarantee of business debts – another might be punitive fine print on a car rental contract that nobody ever saw). If the US wishes to continue to ambush its diaspora with this nonsense to force them to renounce, then we should have large warning signs on every passport and outside every US consulate or embassy similar to tobacco warnings: “do not enter under any circumstances unless you understand the following….” Since they have never seriously imposed it in the past, it is incumbent on them to provide a simple and penalty free way out of their Circle of Hell for those who don’t want to belong.
Hopefully, the Court Challenge will provide a strong incentive to do just that as it will not survive, of that I am quite confident.
Interesting and frightening the “law” we know about Selective Service and how Professor Kirsch referred to it in his interview. As far as I’m concerned it could easily be part of the “slippery slope” of “intended consequences” letting the U.S. come into Canada to override Canadian law. After all, isn’t the law is the law is the law — even though that is not right now being enforced and penalties handed out / even though there is not right at this moment an actual Draft in the U.S.?
I listened to Kirsch but it went in one ear and out the other. I did not know he mentioned the selective service, which my son has not enlisted in but I can tell him a scary story when he returns from Seattle in a week. Potential fine of $250,000 according to badger’s reference (http://en.wikipedia.org/wiki/Selective_Service_System). Makes FATCA look paltry.
I left out the zed (another great scrabble word) and the final sentence should say “makes FBAR look paltry”.
I think you guys are wrong about Michael Kirsch. I know it’s difficult to hear what he has to say, because it violates everything that The Isaac Brock Society stand for, but I think we should listen nonetheless.
This man is extremely key to our cause, even if he appears to be on the wrong side of it. He was the “Principal Treasury Department policy advisor on international tax issues affecting individuals” from 1997 to 2001. I’m not the first to say it in these comments, but we should listen to him carefully. Perhaps more than anyone thus far, his writings and words are deeply insightful of the U.S. policies that are causing us so much anguish.
Personally, I thought he spoke with extreme clarity and deference, while calmly answering all questions in what might be described as a mildly hostile environment. I’m not aware of anyone from the IRS, Treasury or Congress who has afforded us such decency. We are the collateral damage of CBT; his justification of it is in the wider US context. While I don’t agree with his reasons, I don’t think they’re as readily discountable as we’d like. He’s also keenly aware of our plight and while I’d have liked it if he had addressed our situation more directly, I didn’t expect him to propose new U.S. policy on the air. I reckon he has much more sympathy for us than the rest of you think.
I actually have a high regard for his legal acumen. I had read a number of his papers before hearing this interview. His paper justifying CBT is more of a social and policy statement, probably written in response to the proliferation of others by his colleagues recommending RBT. I really loved “Tax Code as Nationality Law” where he destroys the previous Section 877 expatriation laws by highlighting various loopholes as well as likely violations of the constitution and international law:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=785425
It’s worth remembering that he’s an academic, albeit with strong ties to the establishment. As an academic, he should also be keenly interested in formulating policy in such a way as to minimise the unintended consequences to the likes of us. Another thing worth pointing out is that prior to his time at the Treasury, he worked for Sheppard, Mullin, Richter & Hampton, a large and prestigious global law firm headquartered in LA. Looking at their website, they represent over half the Forbes 100 companies, and their international tax division appears to offer services that include creating the type of offshore tax structures that Congress are presently trying abolish.
It’s quite normal, in the rarefied circles of tax professionals, to move among the private sector, academia and the government, accumulating experience along the way. Personally, if we were ever in a position to mount some kind of court challenge in the USA, I’d want him on the legal team. Those who defend a castle know it’s weaknesses much better than those who attack it.
@Domino
“Personally, I thought he [Kirsh] spoke with extreme clarity and deference, while calmly answering all questions in what might be described as a mildly hostile environment. I’m not aware of anyone from the IRS, Treasury or Congress who has afforded us such decency.”
Kirsh is defending slavery but trying to be polite about it — a slavery apologist with a smile.
“As one of the elements of the offense, the government must prove that a violation of the Military Selective Service Act was knowing and willful. This is almost impossible unless the prospective defendant has publicly stated that he knew he was required to register or report for induction, or unless he has been visited by the FBI, personally served with notice to register or report for induction, and given another chance to comply. ” Does this rhyme with something?
@Domino is correct.
Professor Kirsch frames the arguments for CBT as well as they can be framed. In so doing, I believe (and obviously the rest of you do too) that he demonstrates that CBT cannot be defended. He demonstrates that the justifications for it (limited as they may be) are immoral and out of touch with global reality.
At this very moment there is a “heated discussion” at Robert Wood’s blog with some Brockers participating.
http://www.forbes.com/sites/robertwood/2014/08/15/dear-mr-president-why-im-leaving-america/
The extent of “Homelander” ignorance is incredible. It’s as though America is a “third world country” (which it is rapidly becoming). Now extrapolate this ignorance to the U.S. Government (Congressmen, Senators and the like). Yes, this really is the mindset of America. It’s almost impossible to even “open the door” to any rational discussion on this issue.
Opponents of CBT have at least made a “connection” with Professor Kirsch. The man did attend the Toronto conference (which I suspect was not pleasant for him). He did do the interview with CBC (what’s in it for him?). He is a “port of entry” into a discussion on the issue of CBT.
Our goal should be to educate him and not vilify him. All his arguments are based on “theory”. There is nothing he has said or written that suggests to me that he really understands the practical impact of CBT. He knows little or nothing about citizenship law and the law of relinquishment.
He is a very valuable in two respects:
1. Demonstrating that CBT cannot be justified; and
2. More importantly – getting the issue heard.
I would also add that Professor Harvey (as much as he is despised) is key to that effort.
At least these two people are willing to engage in some kind of discussion.
Hard to believe anyone would dare to use the phrase pax Americana.
All I’ve ever experienced is POX Americana.
What was the time gap between the fall of the Berlin Wall and the first assault on Iraq? About nine months. Symbolically, the period required to give birth to new death.
The Ignited Hates of Armorica desires to have a big enemy at all times.
@Annefrank
I fear that other governments will do the dirty work FOR America. The banks are afraid of the sanctions ( 30% withholding) and if they give out names of US accountholders and the US account holders don’t pay up, then the banks will finally have to face the 30% withholding- as far as I have understood it. And in many countries accounts are being closed or frozen. So I don’t think this hiding behind the fact that Canada won’t collect for the IRS is so clear cut.
Also very worrisome is that somebody with no ties to America could be drafted into their army.
The population of Switzerland is about 8 million. The population of Israel is about 8 million. There are countries with a population equaling the number of expats affected. Add another 13 million green card holders to the 7 million expats, and we see that maybe 20 million affected by CBT. That is the size of quite a few sovereign countries.
Regarding Selective Service;
Most US Embassies and Consulates helpfully provide registration information and reminds all young male they are obligated to register;
http://canada.usembassy.gov/consular_services/selective-service.html
In regards to FATCA reporting, date of birth is part of the submitted information. Now please remember that date of birth is not listed on a US tax return nor is date of birth listed on interest reporting by banks.
Who is to say that some US database might not be looked at to determine if US Person males with an appropriate date of birth have not registered.
@AnneFranke, beautiful writing. I have copied and saved it. 🙂
@Domino, yes you are indeed correct. These writings open up the mindset of a person who was involved at the very core of the process. And yes, it is possible to bring anyone over in opinions. Your philosophies remind me of Clausewitz and Sun Tzu.
Would a man like Kirsch consider CBT in its present application socially just?
In thinking what you wrote, I have been and remain so even after reading the Dual Tax Treaties that it seems to imply that you pay and file your taxes in one country. I was actually told that by a tax agent in person in my home country. If thats not the understanding of the US, would it not make sense to clarify dual tax treaties that there is a filing obligation but only in one country? That way the US could differentiate between tax havens and non tax havens.
Such an idea would diffuse any suggestion of universal CBT which would surely hurt the US.
@Johnson:
Challenge accepted!
1. When I go back? I’m happy where I am, and have no interest in going back. Why would I want to go back to a country that treats its own citizens in such an abusive manner anyway?
2. I received some education in the US — and paid taxes and tuition for that education. But, I also received education in other countries where I am not a citizen. Should I pay lifelong taxes to those countries for the rest of my life as well, no matter where I end up living in the future?
3. I don’t live in a tax haven — far from it. But even if I tried to claim residence in one, my actual residence in a rather high-tax country would override any attempt to do so. Most countries’ tax authorities are not so stupid as to be fooled by a bogus claim of residence. Am I supposed to believe that the US is unique (i.e., uniquely stupid) in this respect, also?
4. Any benefits I gain from the Pax Americana come from the taxes I pay to my country of residence (which in turn provides ample payment to the US for those benefits). I do not receive any unique benefits for being a US citizen here. I receive only the same benefits that my non-US citizen neighbors receive. What extra benefit am I supposed to be paying for?
Globalisation is often used as an excuse for CBT.
A globalised tax system with localised services don’t mix. Globalised local services will never exist. Each country has its own culture and its own needs.
The US is attempting to ‘skim’ off the top from people who owe the US nothing and who coincidentally receives nothing from the US abroad.
When the US starts providing Medicare, Medicaid, Unemployment and Food Stamps abroad at least it’ll be a level playing field with Homelanders.
Mr Kirsch CBT is plain wrong and your arguments in favour of hold no weight.